After spending more than a decade (2001 – 2012) in Telecom Industry for various national/multinational companies in Pakistan I was able to build a successful career for myself. Yes, telecoms in Pakistan is a cut throat business but it provides fuel to those who are ambitious and want to grow fast.

After reaching the position of Chief Commercial Officer for a leading Telecommunication Company (highest possible position one can hold before becoming Chief Executive), I decided to change my career path from telecommunications to banking. At the peak of price wars, saturation and very thin margins, telecom industry was naturally destined to decline, exactly like we had predicted in early 2010.

At the same time, Pakistan’s financial sector was and is still growing rapidly, opening up a world of opportunities through Digital Banking, and Branchless Banking regimes.

How is it possible for an institute to think about Digital Banking and doesn’t require Digital People? After evaluating the scope, growth chances and the right time, I jumped into it and joined one of the Largest Banks of Pakistan.

With lot of hopes, innovative ideas, faster pace and out of the box thinking I was sure to be on top in a shorter span of time based on my expertise and exposure. But, surprisingly banking sector was altogether a different world. Soon I realized that there is a stark contrast between the both industries. The pace at which new projects, existing projects and BAU is conducted in banking sector is extremely slow and time consuming. A project that would hold a TAT at one quarter at there (in telcos), takes approximately two years to complete here (in banking).

Individuals are not encouraged to think out of the box and new initiatives are not something to be appreciated here and this leads to lack of innovation. People believe to follow rather than dare to lead. Everything is gauged on ‘Market Practice’ and ‘Precedents’ and someone with newer ideas is usually termed as ‘Non Industry Inhabit’ or a ’Lost Child’ and he / she is met with laughter, harsh remarks, and sympathies in return.

I wondered why there hasn’t been much innovation in the banking sector in Pakistan? Upon digging, it was obvious that majority of the issues were related to regulator. Today I can safely say that State Bank of Pakistan is one of the most strictly regulated central banks of the world.

In my opinion, the rooting problem is the that State Bank of Pakistan’s line of communication is directed at the TOP tier only; they speak with the heads of banking institutions i.e. the President, CEO or the Chairmen.

Such a line of communication is inconceivable in the telecommunication sector. I remember the incidents when Final Warning Letters were received and answered by manager level POC (Point of Contact) at Telcos and sending a letter directly to CEO of telco (unless its from Chairman PTA himself) is considered something very rigid and unethical.

Banks in Pakistan are good at replicating things, instead of innovating ideas and brining in new products. Any proven business plan that has a proven record will be appreciated greatly, however, if you come up with a new thing – which obviously will involve risk – may not receive similar feedback from the peers.

It is often observed that banks in Pakistan are usually busy in saving their running business lines instead of creating new ones. But, this has to change. Since telcos are running their Financial Services very aggressively and trying to snatch retail businesses from the giants, the time has come for the banks to think differently.

As a matter of fact, banks initially just ignored the telcos, then they started showing the telcos the teeth and now the time has come when banks are in fighting mode with telcos. I am fearing the day when telcos will come ahead to offer credit cards or type of loans to consumers.

What banks should essentially do at this point in time is to delegate the operational responsibilities to business partners. Despite the fact that banks themselves have vast operations, considering the cost involved and magnitude of returns, passing on the responsibility to partners will only reap them the benefits. This is exactly what happened with the telecommunications sector. We saw the emergence of what I call, “White Label Offerings (WLO)”.

These WLO’s came up with the idea offering different type of White Label Telecom Services like, Calling Cards and outsourced services to consumers to reduce costs, and save time. Through these calling cards, ease of access was created and customers were allowed to make calls from their mobile phones by simply purchasing a calling card and dialling the number.

Essentially, banks need to align their vision in the same way telco’s did. Banks have an edge today because in Pakistan, banks have yet to reach a stage of full maturity in digital and branchless banking platforms. This is particularly crucial at this time because startup culture is about to kick in here in Pakistan.

With emergence of 3G technologies, there would be countless startups who would be willing to partner with banks to offer these WLO to act as a front end of a financial solution while back end can be conveniently managed by the banks themselves.

So, the bank aligned with the WLO will have complete control over security, risk, KYC, card production and any information that is stored on your card. It is important to understand here that we are talking specifically about Branchless Banking products to begin with. Some great examples could be the outsourcing of WLOs for front end management.

Once and if these ventures prove to be successful, then banks can start offering more of their services to WLOs such as branch franchises and credit cards. Banks will benefit in terms of less workload, better returns, more business and new outsourcing initiatives while white label companies will get benefited in terms of making a brand name for themselves and earnings through product pricing and commission income.

Once banks in Pakistan get comfortable working with WLOs it will automatically create a ripple effect. This will lead to innovation and out of the box thinking not only inside banks but with their external partners in terms of product enhancement.

Young entrepreneurs with fresh start ups will want a piece of the cake and will bring in investment in such companies. To sum up this behavioural change from the banks perspective, they need to explore the option of white label offerings to avoid disappearing from the economic map the way in which Paktel, Instaphone and Kodak did.

This paper is aimed at audience from all walks of life. I understand that people who do not have a banking or financial services background, may take a look at this and find the whole union between banks and white label offerings as an interesting venture but they will be highly sceptical about its success.

Let’s come to the banking cohort of the population now; old and conventional bankers will also be wary of this idea at the risk of thinking out of the box but they might pitch it to their Digital teams to explore it further.

From the point of central banks of countries, our regulator, SBP will see this as a pretext for bringing modifications in banking policies/frame work and will route the idea to their relevant departments to look into this possibility further.

Last but definitely not least, new start-ups that are run by young entrepreneurs will be ecstatic about WLOs and will want to invest their funds in such operations, by thinking which bank to contact immediately for discussions and evaluation of.

Author is working at a senior position in one of the Largest of banks of Pakistan. He manages Digital Payments and has approximately 15 years of experience in Sales, Product Development & Management in Telecom, FMCG and Digital/Retail Banking.

If banks need innovation, They have to give the chance to the fresh blood and start encouraging the R&D. Engage the University students for their thesis, If industry want the new ideas. Too many people want to work on that either they don’t have resource or guidance or space to work. Last but not the least change the old mindset in the banks. Literally, I know the people who still want the Banker’s Check instead of PO/DD. :)

desi

Good piece of writing. Hopefully someone from SBP will read this and make some changes they way the do business

Junaid Ahmed

SBP is not going to do anything. Banks have to take the initiative to go with some solid proposal and I know they will entertain.

Junaid Ahmed

SBP is not going to do anything. Banks have to take the initiative to go with some solid proposal and I know they will entertain.

seems like kamran should move to the sharia islamic caliphate of north waziristan.

Bilal Iqbal

It is not a matter of north Wazirastan but there is a clear instruction in Quran that interest is a War against Allah.. it seems odd for me being a business student… but why not we do some research on True Islamic economic system in which Real investment is made for business and Profit/ Loss is shared among investors (Mazarbah).. Read Mr. Orya Maqbool Jan who is a part of International movement against Ribah/ interest and has presented a complete alternative economic system based on islamic rules… this is not a joke but most of the problems in our world are caused by this interest system which is suitable for Capitalists only and poor people/ countries are facing worst conditions…

Shahid Saleem

I prefer to live without interest. But you know what? under Islamic society of the past, there were always poor. Under socialism or communism there were always poor. Under capitalism there are always poor. Poverty has nothing to do with the system.

Bilal Iqbal

poverty is a different thing my dear.. any one who can not perform.. stay poor… I am talking about much bigger economic problems…let’s hope for good in future.. :)

MohammadKamranIqbal

O wait wait wait mr shahid saleem! Wt u said u mean people like me who really wants to defend the verses of QURAN not stupid jews or chiristianic thoughts should be at north wasiristan…

For your kind information and I bet it would be mind blowing informative line for you that
From the past two years Britains started an islamic banking system and check out there official banking sector reports that the turn over of islamic banking system is 200 times better than there old banking system and more intrustingly they observed that thats equally beneficial for customers and bankers..

For your kind information and I bet it would be mind blowing informative line for you that
From the past two years Britains started an islamic banking system and check out there official banking sector reports that the turn over of islamic banking system is 200 times better than there old banking system and more intrustingly they observed that thats equally beneficial for customers and bankers..

Take it easy man. At one time, guys like you declared Loud Speaker as “Shaitan ka Baja” and Train as “Shaitan ki Sawari”. Today’s Interest System is entirely different from Islamic concept of Riba. Lekin aap jaisay logon ko 50 saal baad samajh aayegi.

MohammadKamranIqbal

Hahahaha u must b kidding man…

We are talking about the clear wordicts and verses of QURAN and HADEES.

Don’t worry about the above comments bro, they are just wanna be Gorras….they are bunch confused cool dudes who think Angel dropped them in Pakistan by mistake otherwise they were destined to born in the Hollywood Hills. Mentally they are not part of Islamic society thats why one loves Sooad and another one thinks Quran is a book of past and present interest system has superseded its knowledge…

Stupid_420

Saying that Riba and Interest are two different things doesn’t mean Quran is a book of past. Our mullahs and people like you are living in past and not willing to understand modern financial system just as people like you refused to accept simple tools such as Loud Speaker and Train.

SAM

You must be a banker thats why defending modern interest systems just to prove that your job is Halal…may Allah give you long life but people like you will understand after 50 years when you’ll be in your grave and at that moment you’ll realize…oopsssss hun tay lag gai meri
May Allah guide us all.

MohammadKamranIqbal

A reall punch…. and opps whats that
Its knock out… yeah mr stupid 420 knocked out by only one goldwn punch by sam…

Hehehehe

Stupid_420

My comment did not get post. Repeating again.

Fortunately I am not a banker and therefore do not have to defend my job as Halal. That sends your argument to grave instead. Sorry about it :)

Just tell me one thing. How come use of Loudspeaker and Train was Haram earlier but is Halal now. People who said Loudspeaker is not Haram faced same hate response which people arguing for Interest face today.

How come the use of technology is not acceptable for Moon Sighting but making announcement of Moon Sighting using technology is allowed, especially the technology that was Haram. I hope you know that I am talking about TV.

Please respond with concrete arguments instead of cursing people who ask rational questions. Let’s see whether you know your stuff or just try to settle every disagreement with Punches.

You are right. He has tendency of being an attention ________. For instance, he says “Preston really doing fabulous job.” But I hope im wrong. After all, corporate sector turns you into a different breed.
He has given an impression that he regrets his decision to switch from telecom to banking sector. Is he right to claim that next promotion of chief commercial officer is ceo? I thought board of governors appoints CEO. There is no such thing as getting promoted to this position.
But he must be an ambitious guy. lets wish him best of luck

Suhrab

Look at this:

“After reaching the position of Chief Commercial Officer for a leading Telecommunication Company…..”

As if he was Chief Commercial Officer in Mobilink, Telenor and the likes. Come on man, DV-Com was a baby. Only a kid could have been made CCO there :D

http://www.prosociallab.com Prosociallab.com

faida nai hua parh k itna ziada

mazhar111

oh bhai banking wallay paypal ke koi khabar ha

http://www.LaoJee.com/ Dr. Saleem Siddiqi

Debit Card loss – Why Customer to suffer ????

If a Debit Card is lost, when you dial a Bank to report its loss, there will be SING and DANCE music for half and hour to do this and do that. I have read that a person’s account was wiped out till the banking officer picked up and took the complaint. But it was too late as the thief had a nice day with shopping the Debit Card at customer’s account.

It is prevailing universal practice in most of the countries, especially in most Middle East Countries to use 4 digit pin code for ALL goods and service purchased through Debit Cards. I happened to be in South Africa and used a Debit Card issued in
Qatar by a Bank. I could use the subject Debit Card very easily anywhere
by punching my 4 digit pin code for safety and security reasons.

For customer’s convenience, nowadays cordless machines for Credit / Debit Cards are widely used in Hotels and Restaurants so that a customer may not get up from his seat to go to counter and instead may punch his pin code simply by sitting and remaining on his / her dinning chair.

This Security is the dire need of the day and State Bank of Pakistan should implement this security measure in letter and spirit and instruct Banks to adopt 4 Pin Security code immediately. They don’t need to invent a wheel for this as this 4 pin security pin code is already built up in the Card which we use for ATM withdrawals.
They [State Bank of Pakistan] must give Commercial Banks a firm deadline to make use of this secret pin code compulsory for each and every purchase failure to comply Banks should be made responsible for all such impending losses incurred by Card owners in case of Card theft / losses.
Regards
Dr. Saleem Siddiqi

http://www.infopakistan.pk/ Khurram ShahzAd

This article doesn’t quite fit the picture and title, my first impression was that writer is talking about some new specific technology to be implemented in banking but it turned out to be mostly the managerial talk and personal experience.

Qais

Good article. You missed one structural issue, in past years banks were essentially taking the deposits and loaning it to Pak Government, netting the huge spread. They did not have to do consumer banking at all; not even commercial banking, as net loans were negative. Now with competition, hopefully, they would need to focus on consumer banking. And to do that, they need innovation.

SBP is truly very rigid, a friend at local bank can not operate mobile app for its sales force due to SBP: as according to them, consumer data is venerable (have they not heard of encryption?).

Innovation in payment can save money even Govt. money (back of the envelope calculations: BISP payout Rs. 70 billion; paid to visa or mastercard @2.5%= Rs.175 million. With its own online payment system, it would be fraction of this payout alone. Something like Dwolla.